Fortune, Inc., is preparing its master budget for the first quarter. The company
ID: 2464423 • Letter: F
Question
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 45,000 for January, 65,000 for February, and 55,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.
Prepare a budgeted income statement for this first quarter. (Rounding your final answers to the nearest whole dollar.)
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 45,000 for January, 65,000 for February, and 55,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.
Explanation / Answer
Quarter 1 2 3 sales 1125000 [45000*25] 1625000 [65000*25] 1375000 [55000*25] Less: cost of goods sold -540000 [45000*12] - 780000 - 660000 Gross margin [A] 585000 845000 715000 Less: Operating expenses commissions [.10 * dollar sales ] 112500 [1125000*.10] 162500 [1625000*.10] 137500 Rent 23000 23000 23000 Advertising [.12 * dollar sales ] 135000 [1125000*.12] 195000 [1625000*.12] 165000 Office salaries 75000 75000 75000 depreciation 47000 47000 47000 Interest [230000*.14*1/12] 2683.33 2683.33 2683.33 Total operating expense [B] 395183.33 505183.33 450183.33 Income before tax c =[A-B] 189816.67 339816.67 209816.67 Less:Tax (.30 * C) - 56945 -101945 -62945 Income after tax 132872 237872 146872